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Producer Company

A Producer Company is a group of people engaged in the production of primary produce or having one or more objectives relating to the primary produce.

A group of ten/more people or two/more producer institutions or a combination of ten/more individuals and producer institutions can register as a Producer Company provided they:

Salient features of Producer Companies

  • A Producer Company can have only equity share capital
  • The minimum paid-up capital required for incorporating a Producer Company is Rupees Five Lakhs only
  • Minimum ten individuals or two producer institutions or any combination of ten individuals and producer institutions are required for forming a Producer Company.
  • There is no restriction on the maximum number of members of a Producer Company
  • Minimum five directors are required for a Producer Company
  • A Producer Company can have a maximum of fifteen directors
  • The tenure of the directors of a Producer Company shall range from one year to five years subject to the provisions made in the Articles of Association in respect thereof
  • The first directors should be elected by the subscribers to the memorandum and articles of association within ninety days from the date of registration
  • The directors other than the first directors shall be elected or appointed by the members in their Annual General Meeting
  • The Producer Company can under no circumstances become a deemed public company
  • In case of Producer Company comprising only of individual members or combination of individual members and producer institutions, then the voting rights shall be based on one vote per member
  • In case of Producer Company consisting only of producer institutions, then the voting rights shall be based on the participation in the business of the Producer Company in the previous year.
  • The Producer company can restrict the voting rights to only its active members provided it is authorized by its Articles of Association
  • The Board of Directors of the Producer Company should meet at least one in every three months and at least four such meetings should be held in every year
  • The First annual general meeting of the Producer Company should be held within ninety days from the date of its registration
  • A Producer Company is required to appoint a whole-time secretary if its average annual turnover exceeds Rupees Five Crores in each of the three consecutive financial years
  • The maximum amount of dividend (limited return) that can be paid by a Producer Company is determined by its Articles of Association.
Nidhi(Mutual Benefit Society)

Nidhi in the Indian context / language means “treasure”. However, in the Indian financial sector it refers to any mutual benefit society notified by the Central / Union Government as a Nidhi Company. They are created mainly for cultivating the habit of thrift and savings amongst its members.

The companies doing Nidhi business, viz. borrowing from members and lending to members only, are known under different names such as Nidhi, Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company.

Nidhis are more popular in South India and are highly localized single office institutions.They are mutual benefit societies, because their dealings are restricted only to the members; and membership is limited to individuals. The principal source of funds is the contribution from the members. The loans are given to the members at relatively reasonable rates for purposes such as house construction or repairs and are generally secured. The deposits mobilized by Nidhis are not much when compared to the organized banking sector.

Regulatory framework

Nidhi’s are companies registered under section 620A of the Companies Act, 1956(Section 406 of the new Companies Bill 2012, as passed by Lok Sabha) and is regulated by Ministry of Corporate Affairs(MCA).Even though Nidhis are regulated by the provisions of the Companies Act, 1956, they are exempted from certain provisions of the Act, as applicable to other companies, due to limiting their operations within members.

Nidhis are also included in the definition of Non- Banking Financial companies or (NBFCs) which operate mainly in the unorganized money market. However, since 1997, NBFCs have been brought increasingly under the regulatory ambit of the Indian Central Bank, RBI. Non-banking financial entities partially or wholly regulated by the RBI include :

Since Nidhis come under one class of NBFCs, RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these Nidhis deal with their shareholder-members only,RBI has exempted the notified Nidhis from the core provisions of the RBI Act and other directions applicable to NBFCs. As on date (February 2013) RBI does not have any specified regulatory framework for Nidhis.

The Central Government vide Notification No.5/7/2000-CL.V dated 23rd March 2000 constituted a Committee to examine the various aspects of the functioning of Nidhi Companies.There was no Government Notification defining the word ‘Nidhi’. Taking into consideration the manner of functioning of Nidhis and the recommendations of the Shri P.Sabanayagam Committee in its report and also to prevent unscrupulous persons using the word ‘Nidhi’ in their name without being incorporated by Department of Company Affairs (DCA) and yet doing Nidhi business, the Committee suggested the following definition for Nidhis :

“Nidhi is a company formed with the exclusive object of cultivating the habit of thrift, savings and functioning for the mutual benefit of members by receiving deposits only from individuals enrolled as members and by lending only to individuals, also enrolled as members, and which functions as per Notification and Guidelines prescribed by the DCA. The word Nidhi shall not form part of the name of any company, firm or individual engaged in borrowing and lending money without incorporation by DCA and such contravention will attract penal action.” A part of this definition is appearing in the new Companies Bill 2012 at Section 406.


The list of registered NBFCs may be seen at :

The quantum of deposits mobilized by these entities may be seen at :

For more details on Nidhi Companies see website of MCA :